Voluntary redundancies dominate PCT pay-offs

Two thirds of the cost of paying off primary care trust managers to make early financial savings went on allowing them to retire early or volunteer to leave the NHS.

HSJ analysed data released by the Department of Health late last month.

The figures reveal £168m was spent on all PCT redundancies and early retirements in 2010-11, the first year PCTs were required to help meet government savings targets.

Of this, £60m went on compulsory redundancies and £109m on voluntary redundancies and early retirements, excluding those relating to ill-health.

The figures also show how much each PCT spent on “exit packages” in 2010-11. Darlington, Camden and Middlesbrough spent the most as a proportion of their total budget, reflecting early decisions to cluster. Camden spent the most in total, at £6.3m.

Forty-one PCTs spent all their “exit package” money on voluntary redundancies and early retirements. Five PCTs spent nothing at all: Swindon, Luton, Haringey, Berkshire West and Gloucestershire.

After the 2010 general election, health secretary Andrew Lansley said he was “appalled” at the rise in the number of managers during 2009-10 and pledged to reduce costs by “almost half”.

Responding to the latest figures, Managers in Partnership chief executive Jon Restell said redundancies had “largely happened without any thought for the long term need for managers in the new system”.

“This is down partly to political distaste when it comes to management issues, but also to the chaotic, ‘un-joined up’ nature of the government’s policies in the NHS,” he added.

Mr Restell said some PCTs were able to meet a large part of their target to cut management costs by releasing interim staff and ending consultancy contracts. Others may have started redundancies in 2009-10 or even sooner.

NHS Confederation chief executive Mike Farrar has previously argued that management levels had become “dangerously low” due to the potential impact on services of the lost expertise.

But NHS Alliance chair Michael Dixon told HSJ: “There’s been a lot of doom-mongering. I see some very good managers still in the system. Some of the people who jumped were very good but others knew they wouldn’t get jobs in the new world.”

The DH’s revised impact assessment for the Health Bill stated redundancy costs came to £142m in 2010-11.

A DH spokeswoman said the impact assessment differed from the latest figures because it only included people who were paid in 2010-11. The more recently published figures included some redundancies made in 2009-10 but paid out in 2010-11.

The bill’s impact assessment predicts that transferring to the new commissioning system will require 12,900 PCT and strategic health authority redundancies, costing £810m.